Vast Majority of Chicagoland Listings Below Conforming Loan Limits

by Peter Thomas Ricci

With talk in the air about overhauling Fannie Mae and Freddie Mac, how much sway does conforming loan limits have on our market?

Fannie Mae and Freddie Mac, the massive government-sponsored entities that are responsible for the vast majority of residential mortgages in today’s housing market, have been back in the news the last couple of weeks, and the topic has been that of reform – specifically, whether the government will maintain its long-standing promise to overhaul the entities and reform the mortgage marketplace.

Interestingly, though, a major part of Fannie and Freddie’s housing policies – the conforming loan limits that stipulate how much a consumer can borrow before entering jumbo loan territory – have not been a part of the reform discussion, and Mel Watt, the new head of the FHFA, has indicted that the limits will not decline in the near future.

So with that in mind, we took a look at some interesting new data from Trulia, which looked at what percentage of homes in a metro area’s housing market were above the area’s conforming loan limits. Should we be shouting from the rooftops for conforming loan limit reform? See the graph below to find out:

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  • Dave Hanna says:

    Well, if you think more borrowers qualify for a loan, and prices rise due to increased demand fueled by more buyers, it is a straightforward conclusion the higher the loan limit the more fluid the market and the higher the overall percentage of home ownership will be.
    As in, healthier activity, more job creation, more opportunities to accumulate wealth via home ownership at all price points in the market, yes we should be shouting to see the loan limits in major metropolitan areas raised to the maximum levels, or maybe just one national loan limit for the GSEs.

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